UAE corporate tax: the complete guide for businesses and finance teams

What is UAE corporate tax?

UAE corporate tax is a federal tax on business profits introduced by Federal Decree-Law 47 of 2022. It applies a 0% rate to taxable income up to AED 375,000 and 9% above that threshold. A 15% Domestic Minimum Top-up Tax (DMTT) applies to large multinationals with global revenue of EUR 750 million or more from January 2025.

This guide covers everything a UAE business owner or finance team needs to know about corporate tax in 2025, 2026, and 2027. It explains the law, the rates, who must register, how to file, free zone treatment, small business relief, transfer pricing, penalties, and how the new e-invoicing regime links to corporate tax compliance.

The legal basis of corporate tax in the UAE

The UAE introduced its first federal corporate income tax through Federal Decree-Law 47 of 2022 on the Taxation of Corporations and Businesses. The law took effect for financial years starting on or after June 1, 2023. For most companies with a calendar year, the first tax period was January 1, 2024 to December 31, 2024.

The Federal Tax Authority (FTA) administers the regime. The Ministry of Finance (MoF) sets policy. Together they have issued ministerial decisions, cabinet decisions, and public clarifications that fill in the detail. You can read the source documents on the UAE Ministry of Finance website and the Federal Tax Authority website.

Why the UAE introduced corporate tax

The UAE introduced corporate tax to meet OECD Base Erosion and Profit Shifting (BEPS) commitments, diversify federal revenue away from oil, and align with the global minimum tax under Pillar Two. The 9% headline rate keeps the UAE one of the most competitive jurisdictions globally while bringing the country in line with international tax norms.

How the law fits with VAT and excise tax

Corporate tax sits alongside the 5% Value Added Tax (VAT) introduced in January 2018 under Federal Decree-Law 8 of 2017, and the excise tax on tobacco, energy drinks, and sugary beverages. The three regimes are separate. A business may be registered for VAT, corporate tax, and excise tax, with different thresholds, returns, and deadlines for each.

UAE corporate tax rates explained

The corporate tax rate uae businesses pay depends on taxable income, business size, and whether the entity qualifies for free zone benefits. The base structure has three tiers.

For a detailed walk-through with worked examples, see our deep dive on UAE corporate tax rates explained.

How taxable income is calculated

Taxable income starts with accounting net profit prepared under IFRS or IFRS for SMEs. You then make adjustments required by the law: add back non-deductible expenses, exclude exempt income such as qualifying dividends, apply transfer pricing adjustments, and carry forward eligible tax losses. The resulting figure is your taxable income for the period.

The Domestic Minimum Top-up Tax for large groups

The 15% DMTT applies to UAE entities that are part of multinational groups with consolidated global revenue of EUR 750 million or more in at least two of the four preceding financial years. It started for financial years beginning on or after January 1, 2025. The DMTT tops up the effective UAE tax rate to 15% in line with the OECD Pillar Two GloBE rules.

Who must register for corporate tax in the UAE

Corporate tax registration uae rules are broad. Almost every juridical person and many natural persons running a business must register, even if they expect to pay zero tax.

Resident juridical persons

Every UAE-incorporated company, limited liability company, public or private joint stock company, and foreign company effectively managed in the UAE must register. This includes mainland LLCs, free zone companies, holding companies, and branches of foreign companies registered in the UAE.

Non-resident juridical persons

A non-resident must register if it has a Permanent Establishment (PE) in the UAE, a nexus through UAE-sourced immovable property income, or other UAE-sourced income subject to the law.

Natural persons

A natural person conducting business or business activity in the UAE must register for corporate tax if their total turnover from that business exceeds AED 1 million in a calendar year. Salaries, personal investment income, and real estate income earned outside a business activity are not in scope.

Exempt persons

Some entities are exempt from corporate tax, although most still need to register and notify the FTA. Exempt categories include:

• UAE federal and emirate government entities
• Government-controlled entities listed in a Cabinet Decision
• Extractive businesses subject to emirate-level taxation
• Non-extractive natural resource businesses
• Qualifying public benefit entities
• Qualifying investment funds
• Public and private pension and social security funds meeting set conditions

Walk through the full registration process in our guide to UAE corporate tax registration step by step.

How to register for corporate tax on EmaraTax

Registration is done online through the FTA's EmaraTax portal. Most businesses that already hold a Tax Registration Number (TRN) for VAT have a profile in EmaraTax and can add corporate tax to it.

What you need before you start

• Trade licence copies for all entities in the group
• Emirates ID and passport copies of owners, partners, and authorised signatories
• Memorandum of Association or partnership agreement
• Contact details and registered address
• Financial year start and end dates
• Bank account details for the entity

The registration steps

1. Log in to EmaraTax with your UAE Pass or existing credentials
2. Select the taxable person profile or create a new one
3. Open the corporate tax tile and start a new registration
4. Enter entity details, licence information, and authorised signatory data
5. Upload the supporting documents
6. Review and submit
7. Wait for the FTA to issue a corporate tax TRN, usually within 20 business days

Registration deadlines

The FTA published a phased registration schedule based on the month of trade licence issuance, regardless of the year. Missing the deadline triggers an administrative penalty of AED 10,000. New businesses incorporated after March 1, 2024 must register within three months of incorporation. Natural persons in scope must register by March 31 of the year following the year their turnover crossed AED 1 million.

UAE corporate tax filing deadlines

Corporate tax filing uae rules are simpler than the registration schedule. Every taxable person must file one corporate tax return per tax period and pay any tax due within 9 months after the end of that period.

One return, no provisional payments

Unlike many other countries, the UAE does not require quarterly instalments or provisional tax payments. You file one return and pay the full balance by the 9-month deadline. The return is submitted on EmaraTax and must include financial statements prepared under IFRS or IFRS for SMEs.

Audited financial statements

Audited financial statements are mandatory for entities with revenue above AED 50 million in a tax period and for every Qualifying Free Zone Person. Other entities may submit unaudited accounts but must still keep records for at least seven years.

For sector-specific deadline guidance, read our page on UAE corporate tax filing deadlines.

Free zone corporate tax treatment

The UAE has more than 40 free zones. The corporate tax law preserves free zone benefits for entities that meet the Qualifying Free Zone Person (QFZP) tests. A QFZP pays 0% on qualifying income and 9% on non-qualifying income, with no AED 375,000 small profit band on the 9% portion.

The QFZP conditions

To qualify, a free zone entity must:

• Maintain adequate substance in the UAE (people, premises, expenditure)
• Derive qualifying income as defined by Cabinet Decision
• Not have elected to be subject to the standard 9% regime
• Comply with arm's length and transfer pricing rules
• Meet de minimis requirements on non-qualifying revenue (the lower of 5% of total revenue or AED 5 million)
• Prepare audited financial statements

What counts as qualifying income

Qualifying income broadly includes income from transactions with other free zone persons (where the free zone person is the beneficial recipient) and income from certain qualifying activities such as manufacturing, holding of shares and securities, fund management, headquarter services, treasury services to related parties, and logistics services. Income from a UAE mainland customer is generally not qualifying, with limited exceptions.

Losing QFZP status

If a free zone entity fails any condition in a tax period, it loses QFZP status for that period and the following four tax periods. The full 9% rate then applies to all taxable income above AED 375,000.

Free zone treatment is complex. Read our dedicated guide to the Qualifying Free Zone Person (QFZP) rules for worked examples.

Small business relief

Small Business Relief is an elective benefit that treats eligible businesses as having no taxable income for the period. The business still files a return but pays zero corporate tax.

Who qualifies

A resident taxable person qualifies if its revenue in the current tax period and all previous tax periods is AED 3 million or less. The relief is available for tax periods ending on or before December 31, 2026. The taxable person must be resident in the UAE and must not be a Qualifying Free Zone Person or a member of a Multinational Enterprise Group covered by Pillar Two.

How to claim

Small Business Relief is claimed in the corporate tax return for the period. Tax losses and disallowed net interest expenditure incurred in periods where the relief is claimed cannot be carried forward.

Find detailed eligibility and worked numbers in our guide to UAE small business relief.

Transfer pricing basics

The UAE law applies the OECD arm's length principle to all transactions and arrangements between related parties and connected persons. This affects intercompany pricing, management fees, royalties, financing, and free zone transactions with mainland affiliates.

Transfer pricing documentation

Businesses with revenue of AED 200 million or more in a tax period, and UAE entities that are part of a multinational group with consolidated global revenue of AED 3.15 billion or more, must prepare a Master File and a Local File. All taxable persons must complete a transfer pricing disclosure form with the return when related-party transactions exceed the thresholds set by the FTA.

Connected persons

Connected persons include owners holding 50% or more of the entity, directors and officers, and their relatives. Payments to connected persons are only deductible if they are at arm's length and incurred wholly for the business.

Corporate tax penalties

The FTA enforces corporate tax through administrative penalties set by Cabinet Decision 75 of 2023 and updates. Key penalties include:

For details and worked examples on late filing, see our guide to late corporate tax filing penalties in the UAE.

How e-invoicing connects to corporate tax compliance

The UAE is rolling out a Peppol-based e-invoicing regime under Federal Decree-Law 16 of 2024 and 17 of 2024, with Ministerial Decisions 243 and 244 of 2025. The model is a 5-corner DCTCE (Decentralized Continuous Transaction Control and Exchange) using the PINT AE format. Phase 1 mandatory go-live is January 1, 2027 for businesses with revenue of AED 50 million or more, and July 1, 2027 for smaller businesses.

Why e-invoicing matters for corporate tax

Once e-invoicing is mandatory, every B2B (business to business) and B2G (business to government) invoice is exchanged through an Accredited Service Provider (ASP) and reported to the FTA in near real time. The FTA can match reported revenue and input costs against your corporate tax return and your VAT return. Mismatches will be visible immediately, which raises the cost of weak record keeping. Penalties for non-compliance with e-invoicing range from AED 2,500 to AED 50,000 per violation under Cabinet Decision 106 of 2025.

What businesses should do now

Finance teams should map their billing systems, plan their ASP appointment before the October 30, 2026 deadline for large taxpayers, and align master data between their accounting system and their tax returns. Read our pillar guide to UAE e-invoicing for the full timeline and compliance steps.

Group structures and corporate tax

The corporate tax law recognises tax groups and qualifying group transfers, which can simplify compliance and defer tax on internal restructurings.

Tax groups

A UAE parent and its 95%-owned UAE subsidiaries can elect to form a tax group and file a single consolidated corporate tax return. Intra-group transactions are eliminated on consolidation. All members must have the same financial year and prepare accounts under the same accounting standards.

Qualifying group relief

Qualifying group and business restructuring relief

Transfers of assets and liabilities between 75%-owned group members can be made at net book value, deferring any gain or loss. Mergers, spin-offs, and other restructurings that meet the conditions in the law can be carried out without triggering corporate tax, subject to a clawback if the assets leave the group within two years.

Record keeping and accounting

All taxable persons must keep records and documents that support the information in their corporate tax return for seven years from the end of the relevant tax period. Records can be kept electronically but must be available for inspection by the FTA.

Accounting standards

UAE corporate tax requires financial statements prepared under IFRS. Businesses with revenue of AED 50 million or less may use IFRS for SMEs. The cash basis of accounting is allowed for businesses with revenue under AED 3 million.

How corporate tax interacts with VAT

Corporate tax and VAT are separate regimes but draw on the same business records. VAT is charged at 5% on most taxable supplies under Federal Decree-Law 8 of 2017. Mandatory VAT registration is required when taxable supplies exceed AED 375,000 in a 12-month period, with voluntary registration available from AED 187,500. VAT returns are filed within 28 days of the end of each tax period, usually quarterly.

Corporate tax taxable income starts from accounting profit, which is built from the same invoices and ledger entries that drive your VAT returns. Aligning your chart of accounts, customer master data, and supplier master data across both regimes saves work and reduces the risk of mismatches when the FTA runs cross-checks.

Common corporate tax planning points for UAE businesses

Choosing your financial year

New businesses can choose any 12-month financial year. A December year end aligns with VAT calendar quarters and most group reporting cycles. A non-calendar year end can spread workload across the year if your accountant is busy in January.

Salary to owners

Salaries paid to owners and directors must be at arm's length to be deductible. Inflating director salaries to reduce taxable profit will be challenged under the connected persons rules.

Interest deduction limits

Net interest expense is limited to 30% of accounting EBITDA, with a safe harbour of AED 12 million per tax period. Excess interest can be carried forward for ten years.

Tax losses

Tax losses can be carried forward indefinitely, provided continuity of ownership and same or similar business tests are met. Losses can offset up to 75% of taxable income in any future period.

Frequently asked questions about UAE corporate tax

The FAQ section below covers the questions UAE business owners and finance teams ask most often about corporate tax.

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